We take managing investor risk very seriously

Lendy is a responsible property lender and we take risk mitigation, due diligence and underwriting very seriously. Investments made via Lendy place capital at risk. Lendy is not covered by the Financial Services Compensation Scheme. See Lendy's Risk Statement.

The risk of property investment

Property investment—alongside cash, bonds and shares—is one of the four most common types of investments, and none is without some risk.

At Lendy, we take managing investor risk very seriously. This is why we have one of the most experienced and specialist credit assessment teams in the industry, who ensure each investment loan has met our rigorous and robust lending criteria. We only offer investors loans to invest in that have been through our rigorous and streamlined due diligence, credit and legal checking.

Our specialist team of lending professionals has over 100 years of mortgage underwriting experience between them. They are experts in the property market and understand how to assess and manage the risks involved.

What are the risks and how do we manage them?

Like all other types of investment, property prices and demand for property can go up and down. It is for this reason that we would recommend that our investors diversify their investments with us between a range of loans.

This way, if one of your loans falls in value, the borrower falls behind schedule and stops paying regular interest, or we need to take formal action to recover the security, you have spread your risk across a number of loans.

You should therefore consider if you are over-invested in property. If you are you might end up in trouble when housing markets slow. To avoid this, you could diversify your portfolio by holding different kinds of investments.

We feel it is important to make you aware that with investing your capital is at risk and interest payments are not guaranteed if a loan becomes non-performing.

Property-related risks

The value of UK property can go up as well as down, in line with changes to the overall health of the economy. If the value of a property against which you have lent falls, the borrower may find it difficult to meet their repayment obligations.

Borrower-related risk

We treat credit risk and financial fraud with paramount importance—this is at the heart of what we do. This is because loan repayments are contingent on the borrower's successful exit from the underlying property project.

Financial-related risk

Those typically seeking short term property finance in the UK are working to tight deadlines that require fast turnaround finance. The profile of these borrowers can be very diverse too, ranging from individuals to complex corporate structures.

Lendy-related risk

A benefit of investing via a platform like Lendy is that you never have to deal with borrowers directly. We do all that for you. An associated risk of this, however, is that if Lendy were to fail, investors would not have direct access to borrowers to recover their money.

Lendy's five-step due diligence process

Initial due diligence

Our experienced business development managers carry out an extensive 'know your customer' (KYC) process when they first source a loan. Their checks include background searches into the prospective borrower, credit and anti-money laundering screenings, and, in most cases, interviews with the borrower.

Legal panel

After the loan has passed the first stage it is then reviewed by a member of our legal panel. The panel is made up of three Top 100 law firms; DAC Beachcroft, Shakespeares and Clarke Willmott, with all three law firms on holding a minimum of £10m professional indemnity (PI) insurance. For certain projects we also use Warner Goodman, which has £3m PI cover, and for loans secured against Scottish property Lendy uses Gillespie MacAndrew, which has £25m PI cover.

Our solicitors ensure that a legal charge is properly made against each security property, and that each of the security properties has good title. The solicitors also ensure that if a borrower grants additional security, such as guarantees and debentures, that these securities are properly executed and enforceable.

Valuation

We use a number of highly rated independent firms to value security properties. Each firm will be a specialist in the region where the property is located. The firm will use a RICS registered valuer who is able to carry out a full red book valuation. They will also have significant PI cover.

For development loans we appoint an Independent Monitoring Surveyor (IMS), who will certify build costs and satisfactory progress of the development, then monitors progress of a development finance project. Drawdowns from the loan will be made based on the IMS interim reports.

Credit checks

We put each lending proposition under extensive scrutiny to determine its viability. This will include an analysis of the borrower's/sponsor's and/or other principal parties' experience, credit record, business plan and financial projections with particular regard to the borrower's ability to service the debt and repay the loan at maturity.

Credit Committee

Once the full process has been completed, our Credit Committee will then consider and approve each lending opportunity before it is put to investors on the platform.

Lendy Ltd ("Lendy") is a company registered in England and Wales under number 8244913 with its registered office and principal place of business at Brankesmere House, Queens Crescent, Southsea, Portsmouth, PO5 3HT. Lendy Ltd is authorised and regulated by the Financial Conduct Authority (FCA), number 743416, and is registered with the Information Commissioner's Office (ICO), number Z3404040.

All loans made through Lendy's platform are secured on UK property; however, with investing your capital is at risk. Funds lent through a peer-to-peer website are not covered by the Financial Services Compensation Scheme (FSCS). Remember, past performance is not a guarantee of future performance. With all investment, capital is at risk. Please obtain independent advice if you are in any doubt as to whether this platform is suitable for you or if you require tax advice. Please review our full risk assessment here.